Question
On December 21, 2017, Martinez Company provided you with the following information regarding its equity investments....
On December 21, 2017, Martinez Company provided you with the
following information regarding its equity investments.
|
December 31, 2017 |
|||||||
|
Investments (Trading) |
Cost |
Fair Value |
Unrealized Gain (Loss) |
||||
| Clemson Corp. stock | $20,800 | $19,900 | $(900 | ) | |||
| Colorado Co. stock | 9,300 | 8,300 | (1,000 | ) | |||
| Buffaloes Co. stock | 20,800 | 21,420 | 620 | ||||
| Total of portfolio | $50,900 | $49,620 | (1,280 | ) | |||
| Previous fair value adjustment balance | 0 | ||||||
| Fair value adjustment—Cr. | $(1,280 | ) | |||||
During 2018, Colorado Company stock was sold for $8,790. The fair
value of the stock on December 31, 2018, was Clemson Corp.
stock—$19,990; Buffaloes Co. stock—$21,320. None of the equity
investments result in significant influence.
| (a) | Prepare the adjusting journal entry needed on December 31, 2017. | |
| (b) | Prepare the journal entry to record the sale of the Colorado Co. stock during 2018. | |
| (c) | Prepare the adjusting journal entry needed on December 31, 2018. |
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Answer #1
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